>> susie: the recession is over, but don't break out the party hats just yet. we're still dealing with a weak recovery. >> tom: with unemployment stuck around 10%, the federal reserve meets tomorrow to see what it can do to boost the economy's comeback. you're watching "nightly business report" for monday, september 20. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: this program is made possible

by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> susie: good evening everyone. the recession is officially over, even though it may not feel like it. and tom, this recession lasted 18 months, making it the longest one since world war ii. the national bureau of economic research, which tracks business cycles, says the recent recession ended in june of last year, when the recovery began. >> tom: susie, this may put an end to talk of a double-dip, and here's why: the group says any future economic downturn would be a new recession, and not a continuation of the one that began in december of 2007. >> susie: that news comes as federal reserve policymakers gather for a meeting in washington tomorrow. topping the agenda? keeping the anemic recovery rolling.

washington bureau chief darren gersh looks at the fed's dual mandate, and what it means for the economy. >> reporter: the people who gather at the federal reserve tomorrow to decide the future of the economy have two official goals: keep as many people working as possible -- that's called "maximum employment." and keep prices stable. >> they know they are short of their mandate on both counts. >> reporter: vincent reinhart used to help the fed meet its dual mandate as a senior policy adviser. with unemployment at close to 10%, he says it's clear the economy isn't operating anywhere close to maximum employment, which is closer to 5%. and what about price stability? indicators of core inflation are under 1%, with many prices flat or falling. but that isn't the same as price stability. >> it's possible to have too much of a good thing. >> reporter: why? because periods of high unemployment tend to push prices down and prices are not stable when they are rising or falling too much.

>> as inflation starts falling and maybe even veering into deflation, the real value of what you have to pay back goes up and up and up. so it's harder for people who borrow, including the u.s. government, in that regard. >> reporter: with the fed failing to meet either of its mandates, economist josh bivens says the conclusion is clear. >> you're missing both mandates, but in the same direction for once. we're not acting aggressively enough to drive down unemployment, and we're not even acting aggressively enough to get inflation over that 1% floor that we've set. so all the signs point to "do more." >> reporter: maybe not all the signs. economists like richard dekaser argue deflation is a concern, but not enough of one to require immediate action. the bigger concern, he says, is getting back to maximum employment. >> that's why we see the federal reserve maintaining interest rates at what are the lowest level in the existence of the federal reserve and in fact, talking about keeping them there for an extended period of time. all of this is aimed at lowering the jobless rate, that's one of

its two objectives and that's the one that they have not yet achieved. >> reporter: the fed's dual mandate is not just a suggestion, it is a legal requirement. which is why many fed-watchers expect tomorrow's meeting will end with the fed promising to take further action if it doesn't see more progress towards price stability and maximum employment. darren gersh, "nightly business report," washington. >> tom: here are the stories in tonight's n.b.r. newswheel: word the recession is over gave wall street a shot of confidence. the dow rose 145 points, the nasdaq added 40 and the s&p 500 was up 17. trading volume was still light, with 954 million shares trading hands on the big board and just over 2 billion on the nasdaq. the recession may be over. but apparently nobody told the housing market. the national association of home builders' monthly sentiment index was unchanged for september. it's stuck at an 18-month low. hewlett packard and oracle are making peace. late today the companies issued a joint statement saying they've resolved litigation surrounding

oracle's hiring of ousted h.p. c.e.o. mark hurd. no word on any financial settlement, but the companies say they'll continue to work together. they've been business partners for two decades. >> tom: still ahead, remember esprit from the 1980s? the brand is back, and as tonight's "shoptalk" explains, its taking new aim at the u.s. market. >> susie: we have saved too little, taxed and spent too much, and failed to make progress on trade. so says glenn hubbard, a former key economic advisor to president george bush, and now dean of columbia university's graduate school of business. is there a way to get our economy back in shape? hubbard and co-author peter navarro offer a blueprint in a new book, "seeds of destruction." earlier today, i sat down with hubbard and asked him what's the most important first step. >> one, admit what our problems are. they're really long-term problems that have affected american incomes now for more

than a decade. second is to focus on economic growth and to stop public policies that are hurting business people and workers' ability to carry out growth. >> susie: the subtitle of your book is how to reclaim american prosperity. tax cuts for businesses and individuals are crucial. can we really afford to do that right now? >> i think we can. the book says we have to ask a bigger question first. we've got to ask how big we want government to be. what we want governmented to do. it's true if we want a government as big as the one the present administration is suggesting we're gng to have to raise taxes on everybody not just the rich but everybody. but there is a path for entitlement reform, for discretionary spending reform where taxes can be lowered but we have to ask that government question first. >> susie: as a key architect of the bush tax cuts and obviously you favor extending them, how do you respond to president obama who says that tax cuts for million airs and billionaires will not spur economic activity? >> i think the president's arguments are confused. he speaks as if the goal of

the tax cuts is to affect consumer spending in different groups. there's some of that. but people at the top end of the income distribution are often business owners. not all business people are rich. but most high-income people are business people. and so a little more than half of the people at the top 1% are business people. so i would ask the president this question: how is it possible to ask small business people to invest and create jobs if you're proposing to raise their taxes? >> susie: do you think that the president's most recent proposals to give tax breaks for business investment will spur economic growth and innovation? >> in isolation the president's investment incentive idea is basically a good one, but the president is coupling it with tax increases on dividends, on capital gains, on small business investment. but if you just do the math, they undo the effect. yes it's a good policy but in the context of his proposals i'd rather tear them all up and start over. >> susie: glen, you have a

whole chapter in here about why you can't stimulate your way to prosperity. what do you say to economists like robert reich the former labor secretary who is actually going to be on our program later this week who says we need more government stimulus. it's a way to create jobs? >> what we need is to have very strong productivity growth. i think everybody would agree with that. the question is how do we get that? i think the tried and true formula is from the energy and the success of the american private sector. there are times when government policies need to help the economy. i give the federal reserve enormous credit for doing that. i think the jury is less favorable to the recent stimulus proposals we've seen. a far better thing would be to clear up the uncertainty that's facing business people. >> susie: you also call forgetting tougher with the chinese on their protectionist trade practices. will that really boost our exports and cut our deficit or could it backfire? >> it's very important to promote free trade. the u.s. has to take a strong affirmative free trade stance but we have to call out

violations where we see them. china is operating as a mercantileist and protectionist economy. it's bad for the u.s. and it's surely bad for china. i think we need to be honest that. >> susie: revitalizing manufacturing is another suggestion for creating jobs. is it too late for us to jump- start u.s. manufacturing? >> i don't think it is. i think it's very important to do so. a lot of innovation is what i would call innovation on the shop floor. it matters that you're exposed to the actual manufacturing to learn how to do things better. it's very good jobs. what we need to do is stop tying our hands behind our back. stop ridiculously litigation costs, stop the corporate tax system that is highly uncompetitive. stop health care mandates that are threatening business and stop policy uncertainty. no one is saying subsidize manufacturing. let the energies of the private sector work. >> susie: is there any more than the federal reserve can do? policy makers meet tomorrow. >> there's some more the federal reserve can do in terms of long-term asset purchases but i don't think there's much more the fed can

do at this point. what this really requires is a more stable government policy environment. >> susie: if president obama called you up and said, i want your advice, what's the key take-away message you would like him to get out of your book. >> the first thing would be stop the policy, uncertainty, from washington. then do focus on the long term and how we got into this mess and then be honest with the american people. about what size of government do we want and how are we going to pay for it. >> susie: later this week we talk with economist and former labor secretary robert reich about his fixes for the economy and they're very different compared to hubbard. reich makes his pitch in a new book "aftershock."

>> tom: stocks continue to defy history and add to their september rallies. let's look at tonight's "market focus." usually september is the worst month, but not this year. the major indices are at four- month highs tonight, thanks to today's buying. the s&p 500 broke out of its most recent range. in june and again in august, the index turned back at 1,125, but tonight it sits at 1,143, the highest close since the middle of may. homebuilders helped lead the rally on the heels of one builder's earnings, even as the confidence of others remained at a year-and-a-half low last month. the pessimism from the home

builders trade group didn't hurt the sector. this homebuilder exchange traded fund rallied 3%. this is its highest close since july. lennar was the market leader, jumping more than 8% on more than twice its usual volume. the rally takes it back to its july and early august highs. it swung to a profit, with earnings coming in more than twice as good as estimates. last quarter included the expiration of the home buyers' tax credit, resulting in a slower sales pace but lennar didn't use as many incentives to get buyers into homes. k.b. home, pulte group and d.r. horton were among those building stocks finding buyers. each showing decent gains on good volume. home insulation and shingle maker owens corning, though, cut its outlook. the stock dropped more than 4%, falling to its lowest price since january. financial stocks were strong today. discover financial services turned in a strong earnings report. earnings easily beat estimates.

discover card users spent $24 billion during the quarter, up 5% from a year ago. it also reduced the amount of money it set aside for customers not paying their bills. shares jumped almost 4% on strong volume. it's now about $1 away from a new 52-week high. this monday saw its share of merger announcements, including two $1-billion-plus deals in technology. the first involves i.b.m. buying computer data firm netezza, continuing the buyout of data analysis companies. netezza shareholders will get $27 per share, giving the cash a price tag of $1.7 billion. as you can imagine, it was off to the races for netezza stock, up 15% on huge volume. the stock started rallying in mid-august, when competitor 3par was the target of a bidding war between hewlett-packard and dell. h.p. eventually won. the other 10-figure deal involved a french conglomerate buying l1 identity solutions.

l1 makes identification security software. shares jumped 20% to just under the buyout price of $12 per share, or almost $1.1 billion. french company safran is the buyer. meantime, pricing pressures among paper and packaging companies led to the sector taking a hit today. i.p.-- international paper, temple-inland and packaging corporation of america all saw selling on heavy volume. packaging companies had been trying to raise prices, but a trade publication says customers have balked at the higher prices. and that's tonight's "market focus."

>> tom: you may think the swedish company erickson makes cell phones. well it does along with partner sony but it's main business is making all the gear that connects all those cell phone calls and text messages. hans vestberg is ceo of erickson, the telecommunications equipment giant and he joins us tonight. welcome to nightly business report. >> thank you. >> tom: erickson has seen some sales slow across the globe except in north america this year. what's been driving north american telecom. >> i think we have strengthened our position qi dramatically in north america. all the latest technology and the customers and the carriers in the country. also we have... we were running the network for sprint. all in all we have 14,000 employees in north america.

we're more than one provider in north america. this is an important market for us. >> tom: you're talking about the roll out of the 4-g network. what's the global outlook our seeing. >> as we saw yesterday, the report from the commission i think we're seeing very big need for broadband all around the world. the main will be broadband. and the main part will be mobile. we see that from any type of country, the productivity and the importance of having broadband. so that's a general theme across the globe when it comes to broadband. >> tom: clearly anticipating monster growth in the years ahead. just last quarter you blamed component shortages and supply chain bottle necks for slower growth for erickson. are those continue something. >> i think there are a couple different things that enabled or gave us not to have the growth. in the second quarter, we had

that during the full year this year. we've seen gradual improvement in the second half of this year. that still means we're going to have an impact. i will come back in the third quarter and report back. >> tom: i want to take a look at where your revenues come from, hans. more than half come from those equipment sales. you get just over 40% from servicing that equipment and a small amount for multi-media. do you plan on growing that piece of the pie? >> i think the last couple of years our growth has been very much had the service piece. we do everything from installing equipment to running networks, doing system integration to doing consulting as well. our service base is a very important piece. i think as networks are more broadly spread out it's going to be much more about software and services to see that those networks are working well. >> tom: do you see the organic growth there or do you plan on buying some. >> we have acquired a company

two weeks ago here in the u.s., but i think that they're a smaller acquisition acquisition in this area. of course some small addition might be. >> tom: fair enough. we'll look for that possibly in the weeks or months ahead. we have the ceo of erickson along with us at the nasdaq. his name is hans vestberg. thanks so much for your thoughts. >> thanks. >> susie: here's what we're watching for tomorrow: as we mentioned, the federal reserve meets to decide interest rates, and will release its decision. we'll also see august housing starts, as well as quarterly results from adobe systems, darden restaurants and general mills. also tomorrow, our word on the street is "housing." bob walberg of thestreet.com looks at some under-the-radar housing stocks. >> susie: look for a new ticker symbol from united and continental airlines next week-- that's when they start flying the friendly skies together. the combined companies will list here at the new york stock exchange with the ticker symbol u-a-l. the new "united continental

holdings" is expected to debut october 1, when the merger closes. the $3.2 billion deal creates the world's largest airline. >> tom: it looks like layoffs are on the way for bank of america's investment banking and capital markets units. the company is putting the wraps on its annual performance reviews, and is expected to let go of about 3% of those divisions, or nearly 400 workers. published reports say employees will be told about the cuts later this week. these are the first big job cuts since b. of a. bought merrill lynch in january of last year.

>> susie: when you picture fashion from the '80s, there's a good chance you think of esprit. the brand had big logos-- and big success-- especially with teenage girls. but in the '90s, esprit pulled out of the u.s. and focused on europe. now the retailer is back, with a new flagship store in new york city. in tonight's "shoptalk," erika miller looks at the new spirit of esprit. >> reporter: this man is no ordinary esprit customer. he's john gunn, the president of esprit for the americas, buying clothes for himself. yes, esprit, a brand popular with teenage girls in the '80s, now has a men's line.

why did you extend the brand into menswear? >> the brand, when it came from europe, always had menswear. men are coming down, and they are absolutely shocked that we have such a sophisticated men's collection. >> reporter: that's not the only strategic shift. clothing styles have become more sophisticated, to broaden esprit's appeal to older shoppers. you won't find any current merchandise emblazoned with the iconic esprit logo, except a few throwback items near the register. >> this is almost identical of what it used to be back in the '80s, but we don't carry big logos throughout the store now. you'll see that most companies, once they're branded, don't carry their name all over the place. >> reporter: you can see reminders of what esprit used to be at the company's u.s. headquarters in manhattan. shawuan johnson, head of retail for north america, says these vintage '80s fashions helped influence esprit's new look. >> i was really excited to go back to the heritage of the brand. so, i went on ebay-- we bought these styles to get inspiration as we are buying our current

seasons. and we thought this looked so fantastic. it could be a girl walking down the street today. >> reporter: at the company's showroom, you can get a glimpse of esprit's future, including a peek behind the scenes at what's coming up for the holidays. like this military velvet jacket, paired with a sequined tank top and a ruffle-tiered chiffon skirt. you can also see upcoming product lines, like jewelry and footwear. clearly, esprit will have to get fashion right to be successful. but retail expert madison riley says there's an even bigger challenge. >> building awareness of the brand, and sort of capturing the attention and imagination of the consumer. it is a crowded field. you have to be able to carve out a position that's unique and differentiating. >> reporter: there's also the problem of limited distribution of the brand in the united states. esprit currently sells nearly all of its merchandise in the u.s. through its 38 standalone stores. but, in the coming year, the company plans to aggressively expand distribution to include department and specialty stores.

that is a top priority for gunn, who has been on the job 16 months. he says u.s. shoppers are often surprised to learn esprit is no longer american-owned. it is headquartered in germany. its shares trade in hong kong. >> we are, in north america, about 5% of global sales. >> reporter: and your goal is? >> i would like to be 50% to start off, absolutely. >> reporter: so let's check out esprit. the company now sells sophisticated clothing for men and women. it's broadening its product line, hoping to replicate the brand's popularity in europe and asia. two big hurdles in the u.s. are branding and distribution. but esprit says it's up for the challenge. after all,/esprit de corp/means passion of the group. erika miller, "nightly business report," new york. >> susie: wyoming, texas and south carolina, all low-tax states, have seen their populations continue to grow during the recession. tonight's commentator thinks he knows why.

he's bernard baumohl, chief global economist at the economic outlook group. >> if you see more moving vans on the highways these days, its because americans are fed up. there's not much they can do about the economy, but when it comes to paying taxes, people do have a choice--- and more are exercising it by packing up and relocating to more tax-friendly states. a clear relationship has emerged between tax rates and migration patterns. low-tax states like florida, texas, wyoming, and south carolina have seen more people moving in than moving out, while states with the highest tax rates, such as california, new jersey, connecticut and new york, are witnessing heavy migration outward. what's driving americans to move is the desire to preserve their hard-earned wealth. cash-strapped states are trying to wring out more revenues by ratcheting up taxes and user fees.

such actions can reduce one's spendable income and lower personal savings. the rush by states to close the budgetary gap can make matters even worse for their economy. the recent migration out of new jersey and california, for instance, caused tens of billions dollars in personal wealth to leave, and along with it jobs, entrepreneurs and philanthropists. so, while people will always consider a variety of factors on where to call home, such as jobs, housing costs and weather, the urgency to escape high taxes has become another powerful reason why moving vans have gotten busier lately. i'm bernard baumohl. >> tom: that's "nightly business report" for monday, september 20. i'm tom hudson. good night everyone, and good night to you too, susie. >> tom: good night tom. i'm susie gharib. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:

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